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Gold: It's perhaps the only investment that lures investors away from the wisdom of Warren Buffett. Gold is up more than 9% this year on its march toward a 12th consecutive yearly gain, and while the Oracle of Omaha may have recently called the metal a "bandwagon" investment (even comparing it to tulips), investors have fed nearly $8 billion into the most popular gold exchange-traded funds this year. Gold ETFs now hold an all-time high of more than 83 million ounces, according to ETF Securities. The four largest gold funds, which account for nearly 99% of assets in gold ETFs, have more than $90 billion in them.

But unless you're in the apocalypse-planning group of gold investors, whether or not you should join the gold rush depends almost entirely on your view of real interest rates (in other words, the rate you can expect after inflation). Low real rates tend to coincide with gold-price appreciation, perhaps because investors don't lose much by forgoing bonds or other productive assets, says Morningstar analyst Samuel Lee. If you think that the Federal Reserve will keep rates low far into the future, then gold is a buy. But the correlation isn't perfect. According to a recent study out of Duke University, the correlation between the real yield on 10-year Treasury Inflation Protected Securities (TIPS) and the real price of gold is negative 74%. Gold does well when inflation eats away at already low rates, or in periods of ultralow rates, like today.

Gold often is considered an inflation hedge, but that only pans out in a severe crisis. Gold's correlation with inflation was just 1% in the 25-year period of 1986 to 2011, Columbia University's Andrew Ang found. If gold is rising faster than real rates suggest that it should, buyers have to consider whether the price reflects other investors' doomsday scenarios, rather than economic reality.

THE STEALTH CATALYST FOR GOLD may be emerging-market central banks. China is just one country that could ramp up its gold purchases as it seeks to diversify its central-bank reserve holdings, especially if the yuan is to be a global currency. China's gold stock is estimated at less than 2% of its total reserves; a surge in Chinese gold imports has sparked talk of an unofficial binge.

Bulls also cite the lack of a parabolic price move as reason for continued optimism. Nicholas Brooks, head of research at ETF Securities, compared gold's slower-but-steady rise in the past decade to its soaring heights in the early 1980s, or in even another classic bubble, the Nasdaq of the late 1990s. "It's been a stable rise," he says. "Gold doesn't shoot the lights out."